How blockchain can democratize green power

Have you ever thought of buying a solar panel from a hardware store, mount it on your roof, and then sell the green electricity it produces at your desired price.

Is that really even possible? Some companies certainly think it is. These startups can harness the power of blockchains to democratize green power.

Now, before you fully understand how blockchains can be part of the solution, of course, you have to know first a few facts about the so-called green electricity market.

Nowadays, independent auditors assess renewable-energy producers and certify their electricity as “green.” These producers can then sell Renewable Energy Certificates (RECs) to consumers who want to buy green energy. This is how giant corporations like Apple and Google say they are 100 per cent green. They actually purchase certificates from green-energy producers, not generating their own green electricity as what most people think.

The actual energy these companies use is not always green, but for as long as every unit of energy they consume would match up with a purchased REC, green energy is being displaced of carbon-intense energy. RECs markets create a strong and powerful signal for investment in green electricity generation.

Other companies are using power some or all of their operations using Power Purchase Agreements (PPAs). Through this, it can commit them to purchase a certain amount of energy at a certain price over time-scale of about 20 years or so, renewable-energy producers. PPAs can reduce risk for generators with a guaranteed return on investment; thus, it creates a strong motivation for a long-term investment in green generation. However, both of these approaches discriminate against small generators using green electricity.

It’s not easy generating green. That’s a fact. Its RECs certification process is cumbersome, with physical audits and highly expensive, so it doesn’t make sense for mom-and-pop green generators.

Small-scale green generators must have to accept whatever price their local utility pays them, because this price can evaporate if legislators meddled as well as the utilities themselves.

Some companies also use blockchains in storing generation certificates to create tamper-proof meters attached to solar panels. And when the certificates are being traded, blockchains can also store transaction records so that the same unit of generation cannot be resold, and transaction costs and price can be regulated. Thus, this solution makes renewable-energy investment attractive even for small players